2003 (11) TMI 74 - SC - Central Excise

Refund of pre-deposit when appeal to Supreme Court - whether pending disposal of the appeals in this Court the amount remitted as pre-deposit pending disposal of the appeal before the Tribunal has to be ordered to be refunded as has been done by the Tribunal even when the appeals against the final orders made by the Tribunal are pending in Supreme Court - Held that - in modification of the order of the Tribunal below we direct the refund of Rupees One Crore paid by the manufacturer-assessee as pre-deposit subject to the condition that the assessee shall furnish a bank guarantee for the said sum from a nationalised bank and keep it alive and in full force till the main appeals in this Court themselves are finally disposed of to ultimately abide by the result of the appeals. It is made clear that the sum to be so refunded will be only Rupees One Crore and not any interest thereon as directed by the Tribunal - Decided against Revenue.

Summary

Issues: Clarification of earlier stay order, refund of pre-deposit amount with interest, bank guarantee requirement, payment of interest during pendency of appeals.

Clarification of Earlier Stay Order:
The Supreme Court addressed the applications seeking clarification of the stay order issued earlier in Civil Appeal Nos. 1825-1827 of 2002. The Court considered whether the amount remitted as pre-deposit pending disposal of the appeal before the Tribunal should be refunded, especially when the appeals against the Tribunal's final orders were pending in the Supreme Court. The manufacturer-respondent expressed readiness to provide a bank guarantee for the refund. The Court modified the Tribunal's order, directing the refund of the pre-deposit amount of Rupees One Crore, subject to the condition of furnishing a bank guarantee from a nationalized bank until the final disposal of the appeals in the Supreme Court.

Refund of Pre-Deposit Amount with Interest:
The Tribunal had directed the Revenue to refund the pre-deposit amount of Rupees One Crore with interest at 12% from a specific date. The Supreme Court, after considering the submissions, decided that only the principal amount of Rupees One Crore should be refunded, excluding any interest. The Court emphasized the need for a bank guarantee to secure the refunded amount until the final disposal of the appeals.

Bank Guarantee Requirement:
In the context of the refund of the pre-deposit amount, the Court mandated the manufacturer-assessee to furnish a bank guarantee from a nationalized bank. The bank guarantee was deemed necessary to ensure the security of the refunded sum and to be kept active until the final disposal of the appeals in the Supreme Court. This condition was imposed to safeguard the interests of all parties involved in the legal proceedings.

Payment of Interest During Pendency of Appeals:
The Court deliberated on the Tribunal's direction for the payment of interest on the refunded amount during the pendency of the appeals. It was concluded that no interest should be paid on the refunded principal amount of Rupees One Crore. The Court clarified that the manufacturer-assessee would only receive the principal amount without any additional interest until the final resolution of the appeals. This decision aimed to maintain fairness and equity in the resolution of the legal dispute.